Vertex Energy, Inc., Bankruptcy and Environmental Settlement Summary
On December 17, 2024, a settlement between the Environmental Protection Agency (EPA), the Department of Justice (DOJ), and lead debtor Vertex Energy, Inc. (Vertex Energy) and its subsidiary affiliated debtors, including Vertex Refining Alabama LLC (Vertex Refining), was lodged in the ongoing Chapter 11 bankruptcy cases captioned In re Vertex Energy, et al. and filed in the United States Bankruptcy Court for the Southern District of Texas. The bankruptcy settlement addresses Vertex Refining’s obligations under the Clean Air Act’s Renewable Fuel Standard (RFS) program and ensures that Vertex Refining will retire 18,794,250 Renewable Identification Numbers (RINs) in satisfaction of its RFS compliance obligations for compliance years 2023 and 2024.
- About Vertex Energy and Vertex Refining
- Overview of the Vertex Energy Bankruptcy
- Overview of the Renewable Fuel Standard Program
- Obligations
- Overview of the Renewable Fuel Standard Program
- Settlement Agreement
- Comment Period
- Contact Information
About Vertex Energy and Vertex Refining
Vertex Energy is an energy transition company based in Houston, TX, that specializes in producing refined products.
Vertex Refining, which conducts all of Vertex Energy’s transportation fuels refining operations, owns and operates a refinery in Mobile, AL that can process up to 88,000 barrels per day of crude oil into gasoline, ultra-low sulfur diesel fuel, jet fuel, and other products. Most of the gasoline Vertex Refining produces is sold into the local Mobile, AL market.
Overview of the Vertex Energy Bankruptcy
Over the past several years, Vertex Energy’s financial condition has worsened considerably due to a confluence of adverse market forces. On September 24, 2024, Vertex Energy and its affiliates, including Vertex Refining, (collectively, Vertex) filed voluntary petitions for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code.
Overview of the Renewable Fuel Standard Program
The RFS program is intended to reduce greenhouse gas (GHG) emissions by setting a national mandate for renewable fuels that meet specific GHG emissions reduction standards. The RFS regulations created a market-based program to assure that the national mandate will be met. Renewable fuel producers and importers generate renewable fuel credits, known as renewable identification numbers or RINs, for each gallon of renewable fuel that meets the GHG emissions reduction standards. The program requires refiners and importers, known as obligated parties, to retire a specific number of RINs each year based on the amount of petroleum fuel that they produce and import; this is known as a renewable volume obligation (RVO).
Obligations
To date, Vertex Refining has not fully met its 2023 and 2024 RVOs. When these obligations come due, Vertex Refining will be unable to meet them and would be in violation of 40 CFR § 80.1461(c)(1), which requires that no person fail to acquire sufficient RINs to meet the person’s RVOs under 40 CFR § 80.1427.
Settlement Agreement
Based on Vertex’s lack of financial capability to meet its RVOs, the United States has reached a settlement in the ongoing bankruptcy proceedings under which Vertex and the entities that will be acquiring Vertex Refining must retire a total of 18,794,250 RINs no later than March 31, 2025, with specific RIN quantities attributed to each RVO. The settlement agreement will ensure that only valid RINs are used to satisfy these obligations and will impose stipulated penalties if Vertex do not retire the RINs by the deadline.
Comment Period
The proposed consent decree and environmental settlement, lodged in the United States Bankruptcy Court for the Southern District of Texas, is subject to a 10-day comment period and final court approval. Information on submitting comment and access to the settlement agreement is available on the Justice Department’s Proposed Consent Decree webpage.
Contact Information
For further information about this settlement, please contact:
Karen Nelson, Attorney-Adviser
Air Enforcement Division
Office of Civil Enforcement
U.S. Environmental Protection Agency
1595 Wynkoop Street (8MSU)
Denver, CO 80202
nelson.karen@epa.gov